Why I’m voting Labour and you should too

In September 2008, the British financial system was on the verge of collapse. I’m talking actual collapse. Like, most of the major UK banks declaring bankruptcy, credit-starved businesses quickly following suit, supply chains fragmenting, money not coming out of ATMs. And who knows what else… Forced nationalisation of the entire banking system? Of food production? Mass rationing? Basically the kind of scenario we’ve only seen in the rich world during wartime and the Great Depression.

The financial crisis arrived in Britain from the US property market. There, credit had plugged a growing gap between stagnant wages and rising house prices. Banks made a fortune out of this through clever risk-pooling strategies, though in the end though these turned out to be incredibly stupid. “Sub-prime” mortgage holders began to default on their loans and no one could tell which pools were safe and which were toxic. With no one willing to provide credit, the entire system effectively suffered a seizure.

Although there were some structural similarities, the same crisis could not have originated in the UK. There was a similarly growing gap between incomes and rising living costs, but a residual social housing sector and government-provided tax credits housing benefit meant that low earners were neither tempted into unsustainable mortgages nor thrown out into the street. But the New Labour governments of Blair and Brown had allowed the British economy to become one of the most financialised in the rich world. This meant it was particularly vulnerable to contagion from the US crash.

Luckily the dystopian scenario of total collapse was averted by a huge government rescue package, which in the UK had to be disproportionately large. It is difficult to calculate the true cost of this intervention. It combined a mixture of loans and guarantees to banks, as well as a major fiscal stimulus to keep the economy churning. It certainly ran into the hundreds of billions of pounds. The public debt ballooned overnight.

We have been paying for this disastrous event ever since. But if you had just followed mainstream British politics over the intervening 9 years you would never know it. The structural crisis of hyper-financialised capitalism has been rarely mentioned in political debate. Instead a series of other issues have, one after the other, taken centre stage.

The immediate political fallout of the crisis was, quite frankly, ridiculous. In 2007 Conservative leader David Cameron and shadow chancellor George Osborne had matched Labour’s spending commitments. However, following the bailouts they began to talk about the debt and the structural deficit – that is, the gap between money going out and money coming in, which had automatically risen in response to increased unemployment and strain on services. They claimed the debt and deficit were the cause, rather than the result of the crisis.

THIS WAS A LIE.

Prior to the crash public spending as a proportion of GDP was around 40% – well within historic norms and much lower than several other countries that were less seriously affected by the crisis.

Around the time of the 2010 election, as the Eurozone began to tank, Osborne claimed that if the deficit wasn’t rapidly brought under control Britain was on the verge of becoming the next Greece.

THIS WAS A LIE.

The UK was not a part of the Eurozone and so its central bank could use various tools to stabilise its bond markets and prevent the debt from growing exponentially.

What Cameron and Osborne’s LIES were in fact doing was preparing public opinion for a radical austerity programme. As they entered coalition with a pliant Liberal Democrat Party after 2010, they promised to wipe out the deficit within five years, mainly through huge cuts to public spending. They knew the public would be resistant to such a plan, and so mobilised a series of arguments (spoiler alert: LIES) to make their case.

They promoted the idea that the public finances were like a household budget, and that if you “maxed out the credit card”, as the previous Labour government had supposedly done, you had to suffer until you had paid it off.

THIS WAS A LIE

A government is nothing like a household. Its job is not to limit spending to a specific amount at a given moment, but to spend in ways that will sustain positive forms of economic activity over the long term. That means spending on education, on healthcare, on infrastructure, and on social security, all of which have huge and enduring multiplier effects. This applies even – perhaps especially – when the economy in struggling and the private sector refuses to invest. Government debt, sustained by taxation, is invariably more trustworthy and serviceable than private sector debt. It is the economic generator of last resort.

Instead, the austerity of the coalition years sucked life out of the economy. It managed, erratically, to squeeze out some spurts of growth by pumping up asset bubbles with Quantitative Easing – Osborne’s own “magic money tree” – though only at the cost of aggravating a long-standing housing crisis. It also held down unemployment, but only by systematically attacking the working and living standards of the population. People were either pushed into shitty, casual jobs at places like Sports Direct or self-employment, or had their public-sector jobs steadily downgraded. Only Greece has seen a worse decline in real wages since 2007. No major advanced economy has seen such weak productivity growth.

Despite all of these attempts to cut its way to growth and deficit reduction, the Treasury’s growth projections consistently failed to materialise and the eradication of the deficit disappeared further and further into the future. Meanwhile, the cuts began to take a major toll on frontline services. Knowing that public opinion might turn against them, the Conservatives needed another line of attack, so they began to blame “scroungers”. These were the feckless poor who sat around all day enjoying a life of luxury at huge public expense, while honest “strivers” went out to work.

THIS WAS A LIE.

Unemployment benefit constituted a tiny amount of the national budget. In any case, most people receiving welfare support were employed, but simply in jobs that didn’t pay enough to live on. Or they were disabled. These people were systematically impoverished by the cuts, and publicly humiliated by new workfare schemes and, sometimes deadly, “work capability assessments”. From being practically non-existent in 2008, today there are over 2,000 food banks operating in the UK.

It may have failed economically, even on its own terms, but austerity was always more a political project than an economic one. In the long term it aimed to permanently shrink the British state. In the short term it sought to trap the opposition into accepting this logic. And in this sense, it worked. Against his better judgment, and despite challenging especially predatory sectors of the economy (energy and rail companies, zero-hour employers, landlords, the press), “soft Left” Labour leader Ed Miliband refused to contest the Conservatives’ central narrative about Labour’s overspending, and triangulated in response to their attacks on welfare recipients. He was fighting with one hand voluntarily tied behind his back.

In the absence of effective left-wing opposition to the coalition’s economic disaster, this instead came, in a roundabout way, from the right. Mid-parliament, the anti-EU and anti-immigrant UK Independence Party began to surge in the polls. Terrified of losing votes and MPs, Cameron was bullied into offering a referendum on Britain’s membership of the European Union. He thus gambled the future of the country for the sake of internal party management. He also began to parrot UKIP’s anti-immigration rhetoric, reproducing tropes about immigrants stealing jobs and sucking up benefits.

THESE WERE LIES.

Immigrants have an overwhelmingly positive effect on the economy, doing crucial jobs and disproportionately contributing to the tax base. Nonetheless, the damage had been done.

Cameron got lucky on the 2014 Scottish referendum, and even luckier in the 2015 general election. But in 2016 his luck ran out. Many voters were looking around for someone to blame for austerity, and they had been conditioned by years of relentless media LIES about the EU and immigrants. The Leave campaign LIED through its teeth, but then again so did Remain. The whole thing became an ugly mud-slinging match, where no-one believed anything and everyone simply voted on emotion. In the end, a narrow majority of the electorate voted to leave the EU. The “modernisers”, Cameron and Osborne were out. And a new nativist Tory-UKIP hybrid, coalescing around Theresa May, was in.

During May’s year in power the lies have come thick and fast.

She claimed that Britain would quickly achieve improved trade deals with the EU and with other major economies.

THIS WAS A LIE.

The task will be fiendishly difficult and is probably beyond the capacity of the civil service and the government’s sorry looking “Brexit team”.

She claimed the “saboteurs” of parliament were blocking her Brexit plans.

LIE.

MPs voted through Article 50 with very little opposition, terrified of being accused of resisting the “will of the people”.

She said on multiple occasions that she wanted to provide stability and that the last thing the country needed was another election.

LIE.

In mid-April she called a snap election. She believed that with a 20+ point advantage in the polls she would win at a stroll. And at least that way she would secure a strong mandate for the inevitable failure to come.

I will not even go into the SUCCESSIVE LIES of her dreadful campaign.

All in all, the story of our political class since before 2008 is one of relentless and spectacular failures. And it is a story of deep dishonesty about the underlying causes of those failures. Let’s call this what it is: an economic system that does not work – that cannot work – for most people, and a political system that does all it can to prevent us from changing that.

And yet over the past two years, something has been growing in the darkness. Sick of austerity, and disgusted by the scapegoating of immigrants and the poor, a growing number of people have been demanding something different. Since 2015, the Labour Party membership has more than trebled, making it Europe’s largest social democratic party. And it has elected as its leader Jeremy Corbyn, a veteran backbencher who, almost alone, stuck to his principles during the long years of New Labour hegemony.

Corbyn is not perfect. There are points on which I disagree with him. At times over the past two years I have thought his leadership looked fundamentally incompetent. But I have no doubt that he is as sincere and principled as he seems. (He has been my local MP for my entire life, and I have honestly never heard a bad word said about him). And, as the Party’s manifesto shows, he has the beginnings – though only the beginnings – of what could be a genuinely transformative programme.

But here’s the most important thing: it’s not even about Corbyn. He is just a temporary place holder for something much deeper.

Really, it’s about us.

It’s about the (re)emergence of an active and informed public that will no longer put up with an economic system that clearly doesn’t work.

That will reject the unspoken rules of establishment politics and media, where lies go unchallenged.

That will resist the supposed inevitability of social inequality and deepening prejudice.

That will allow itself to believe that something better is possible.

I dearly hope I’m wrong, but I expect the Conservatives to win a comfortable majority tomorrow. I don’t think we’ve yet turned the corner on that front. But even so, it won’t feel like a defeat. This government has no answers to the real problems we face. And the last few weeks have shown that when it inevitably fails there will be an active, energised mass ready to hold them – and the Labour opposition, whoever is leading it – to account.

This campaign has made me believe, for maybe the first time, that genuine, radical political change during my lifetime is possible. I don’t know if and when this will bear fruit, but just that feeling of possibility is exhilarating.

Thanks, Mathew. for the clarity about the economics. I am so pleased with what JC and his team have so far achieved especially the huge wave of new young voters. Bodes well for the future, as you say. I wonder if the Labour Movement (and that’s a wide spectrum of groups and organisations) might consider owning and running their own media outlet either TV or Radio. I am thinking of films and documentaries etc etc etc. We need to break free from the BBC et al. I think, for instance, of Positive Money. Numerous activist groups like Campaign against the Arms Trade and so on. Big list of people who don’t get their voice heard.
Something I may raise in my local LP and see what response.
Terry McGinity

Thanks Terry! The result was better than I’d ever hoped for. Let’s hope we can now take this energy forward in new ways. I agree creating new media is essential, although it looks like the nasty old Tory press doesn’t have the power it once did. Their smears failed miserably this time. Social media seemed to be a much bigger factor. Let’s hope it’s a turning point!

”Immigrants have an overwhelmingly positive effect on the economy, doing crucial jobs and disproportionately contributing to the tax base.”

This is simply not true and, to ape your rhetorical style, is a lie.

In the first instance, immigration has always been at the behest of capital. This was once understood by the Labour movement. Marx’s First International organised to resist the importation of migrant labour to break strikes and lower wages. Kier Hardie demanded that Lithuanian workers be repatriated.

If it has a ‘positive’ effect then it is on the profits returned to capital. It is strange that someone writing as a socialist resorts to the abstract ‘economy’ rather than considering the impact on wages, workers power, housing and public services. The role of a rapidly increasing population on the expansion of the money supply and the astronomical house prices / rents, and consequent increase in securities for bankers to gamble with, is deliberately ignored here.

ONLY immigrants from Western European countries make a net positive contribution to the public finances. Eastern Europeans make an at best neutral tax contribution but this fails to take into consideration the effect on the requirement for benefits for British workers whose wages have gone nowhere, who can’t get a job and whose rents have gone through the roof due to the vast increase in surplus labour / demand for housing. Then we have the enormous burden imposed by non-EU immigration: even the open borders zealots at UCL admitted that between 1995 and 2010, non-EU immigration had cost £120bn more in benefits than taxes received. The Keynesian economist Robert Rowthorn put the figure even higher.

The scale of immigration since 1997 has been unprecedented in the history of this country and will have demographic effects which are similarly unprecedented and uncontrollable. No one ever voted for this. It has been the kind of top down imposition that supposed ‘democratic socialists’ abhor. If they are democratic that is.

It was from Labour a grotesque mix of selling out to capital and pure racial politics: the belief that black and Asian non-EU immigrants can be counted on to vote Labour as they replace the native and pre-1997 population in the country’s demographics. This kind of population manipulation is straight out of the politics of the British Empire. Or authoritarian communism (cf. Tibet).

For this reason alone Labour is prepared to ignore a mountain of atrocities within or nearby the increasing number of Muslim ghettos: Sharia courts where a Muslim woman is worth half a man; the thousands of child marriages; the tens of thousands of acts of mutilation on Muslim girls’ vaginas; the forced marriages; the hundreds of ‘honour’ killings; the regular incitement to violence in the majority of mosques (not the mythical minority); endemic electoral fraud; the grooming, gang rape and prostitution of tens of thousands of white children and an unknown number of Sikh and Muslim children by vast networks of Muslim paedophiles from Rotherham to Oxford, from Newcastle to Rochdale over the last 30 years.

Principle? What principle? Corbyn knows ALL of this and more. Just as he knew what he was doing when he stood at the funerals of men who put bombs in pubs and at cenotaphs.

The idea that the Labour party is any more moral than the Conservatives is vomit-inducing for those living in the real world.

My point was that immigration is not the primary cause of the systematic downgrading of living standards and public services since 2010, but that Conservatives encouraged that idea to divert attention from the failure of austerity. Do I take it that you do believe immigration was the main factor? As a thought experiment, do you think Britain would be in a better state today if there had been little or no immigration during this period but with the same economic policies? Bear in mind only Greece has seen a worse collapse in real wages since 2007. Meanwhile, most other European countries have seen real wages increase, albeit slowly. There aren’t significant differences in migration rates across the EU since 2007, so I think we can discount this as the primary cause. By implication, I think we can assume that most of the heavy lifting in reversing these trends can be done through a mix of fiscal (and perhaps monetary) policy, public spending and strengthening of workers’ rights and collective bargaining. I AM being a socialist, precisely because it is these areas I would focus on. The UKIP/Tory right position is to lower immigration while strengthening capital’s advantage over labour. This would do nothing to improve the working conditions of “British workers”. They are the enemies of working people. If you support them on the false assumption that immigration is the main problem facing the country, so are you.

So let’s be honest here. Your argument isn’t an economic one, is it? You don’t appear to be any more of an expert on the economics of migration than I am. I find it interesting that in a fairly long text (that presumably you otherwise agree with?) you have honed in on about 5 lines about immigration. You attack this short passage with an economic argument that doesn’t actually engage with what I said (as above). You then move on to making a *cultural* argument, which you seem to think is about immigration, but actually is essentially about Muslims. And you do it using the worst alt-right tropes: “Muslim ghettoes”, “mutilation of Muslim girls’ vaginas”, “vast networks of Muslim paedophiles”. Do you realise you have made these huge logical leaps in your head? You have responded to an argument against post-2008 disaster capitalism by essentially accusing a complete stranger of tolerating rape and paedophilia. I think you should reflect on why you have done that and why you think it’s ok to speak to me like that.